Cost-Saving Ideas: Establishing an Effective Fleet Management System
To ensure your fleet operation is cost effective and efficient, you should establish a management policy that each department can monitor for compliance.
Essential to this oversight is keeping good records, such as vehicle daily mileage logs, fuel usage logs, and the cumulative costs of parts, labor and overhead by a vehicle over its life.
Because your municipality’s fleet and usage are unique, use these guidelines to craft an effective fleet management system best suited to your needs.
The goal of optimized acquisition is to obtain the lowest possible price and the highest possible quality.
- Establish procedures on how vehicles will be acquired and what type of vehicles should be acquired based on their intended use. (This step is in addition your municipality’s procurement policy.)
- Consider having employees use their own cars and reimburse mileage rather than purchase a vehicle, as many cases have shown this method to be more cost effective.
- Investigate purchasing through a State contract to capitalize on the State’s buying power. For more information, contact the Office of General Services Procurement Services Group at (518) 474-6717 or visit their website.
- Enter into a competitive bid (the legal bidding threshold is $10,000) for a purchase contract, if appropriate, for certain types of vehicles that aren’t available through a State contract. For more information, contact the regional office that serves your county or the OSC Division of Legal Services at (518) 486-1127.
- Consider purchasing new vehicles as in many cases they require less frequent and costly maintenance than used vehicles. For a real life example, see Determining the Better Deal – A Case Study.
Preventive maintenance is the key to avoiding the repair or replacement of costly major vehicle components.
- Establish preventive maintenance intervals, based on local driving conditions and manufacturer’s recommendations, for each type of vehicle and each type of maintenance service.
- Keep proper records of accumulated maintenance costs for each vehicle, such as vehicle daily logs, fuel usage logs and the cumulative costs of parts, labor and overhead by a vehicle over its life.
- Use your maintenance records to help you make informed decisions, such as extended warranties and replacement or refurbishment.
- Exercise caution when deciding to refurbish an existing vehicle to avoid the cost of purchasing a new one. Several local governments that have tried reported that the expected results of a "new" vehicle were not achieved.
It’s important to know the optimal time to replace a vehicle, as replacing a vehicle too soon or too late wastes money.
- Analyze the cost associated with the vehicle and identify the point, on average, a vehicle is reasonably depreciated but not yet incurring significant maintenance costs.
- Develop a replacement standard using the above point to avoid escalating maintenance costs and optimize resale value.
- Consider the vehicle’s mileage and age, as well as other pertinent information on use and location that may affect the optimal time to replace a vehicle.
- Track each vehicle’s total life cycle costs from the date of its acquisition to its point of disposition and then use this data to help you make informed decisions on vehicles currently in your fleet.
- Ensure that there are no better alternatives than purchasing a replacement if you’ve determine that it’s time to replace a vehicle.
The goal of disposal is to yield the highest salvage value of the vehicles.
- Analyze the various methods for disposal of unneeded vehicles.
- Determine the most cost effective method of disposal for their purposes. Methods of disposal include:
- public auction
- sealed bids